For the second time in a quarter, Indian paint companies increased prices by around 1.5-1.75% in December. In the wake of persistent input cost inflation, paint makers have been raising prices to protect their margins. The sector has been facing a double whammy of surging global crude oil prices and a depreciating rupee. Nearly 55% of raw materials used by paint companies are crude oil derivatives and account for 30-35% of the total raw material cost of the sector. But now that the input cost environment has turned benign, investors can expect margins of paint companies to improve from here on. While it may take a short time to reflect in earnings performance, the benefits of price hikes and lower input costs would boost the margin recovery next year.

(Live Mint)